Tom Stinson, MN State Economist and Tom Gillaspy, MN State Demographer, delivered a powerful presentation at a Minnesota High Tech Association CEO Briefing last summer.

1. Minnesota’s Economics & Demographics Looking To 2030 & Beyond Tom Stinson, State Economist Tom Gillaspy, State Demographer July 2008

3. Minnesota’s Economy Has Changed Since the 1960s

5. Minnesota’s GDP Growth Rate Exceeded the US Average, 1967-2007

6. Minnesota Private Industry Has Generally Matched National Growth Index Of Private Industry GDP BEA. Before 1997 based on SIC. Since 1997 NAICS

7. 2007 Minnesota Per Capita GDP Is 8.8% Above The National Average BEA

8. Payroll Employment Growth 1972-2007

9. Payroll Employment in Minnesota Has Grown Faster than the US Average

10. Manufacturing Employment 1972-2000

11. Minnesota’s Unemployment Rate Has Been Well Below the US Average

12. Minnesota Per Capita Income Has Grown Faster Than The Nation’s

13. Minnesota A Leader Among Northeast and North Central States In Population Growth Since 1990, Slightly Slower Than The National Average BEA from Census. US=1.1%, Mn 1.0% per year

15. Past Performance Does Not Ensure Future Results

17. Minnesota Payroll Employment Has Struggled Since Early 2006

18. Minnesota’s Unemployment Rate Now Is Similar to the US Average

19. US Manufacturing Employment Fell Faster Than MN, 2000-2007

20. Minnesota Ranked 30 th in Employment Growth, 2000-2007

21. Minnesota Ranked 24 th in Real Per Capita GDP Growth, 2000-2007

22. Real Per Capita GDP Growth Compared to Neighboring States 2000-2007

23. Real Per Capita GDP Growth Compared to Midwestern States 2000-2007

24. Real Per Capita GDP Compared to High Tech States 2000-2007

27. But… What About Tomorrow?

31. By 2020 Minnesota will add about ¾ Million People & 1/3 Million Households State Demographer projection revised 2007

32. Suburban & Exurban Growth Coupled With Rural Declines Central Cities Have Stabilized

33. Upper Midwest Becoming More Diverse But Still Less Than The Nation Note: Population except white alone, not Hispanic, 2006 Census Bureau estimate. Hennepin in 2005

34. In 2006, Minnesota’s Foreign Born Workforce Was 240,000 or 8% Of The Total Workforce 2006 ACS

35. From 2010 to 2020, Minnesota Will See Large Increases Age 50s and 60s Source: Minnesota State Demographic Center Numbers are rounded

36. The Number of Workers Turning Age 62 Will Jump 30 Percent in 2008 2005 ACS

37. Childless Couples And 1-person Households Projected To Grow Minnesota State Demographic Center projections

38. Competition For The Future Workforce Will Increase Census Bureau US Proj, Mn State Demographer revised 2007

39. Labor Force Growth Is About To Slow Sharply

40. Migration Increases in Importance as Labor Force Growth Slows State Demographer projection revised 2007

44. R&D Spending Slowed in the Early 90s We Are No Longer Above Average Rank 1972 Rank 2004 Total Academic R&D 19 26 Academic R&D per capita 20 40 Academic R&D per dollar of GSP 20 43

46. Education Is The Key To Productivity Minnesota High School Graduation Ratio 2004-05 through 2005-06 graduates. Based on 10 th grade enrollment three years earlier.

47. Managing State Finances Will Be Challenging

48. Minnesota’s Population Will Change The Three Largest Cost Drivers In The State Budget Census counts & State Demographer projection, revised 2007

49. Health Care Spending Jumps After 55 U.S. Health Care Spending By Age, 2004 Source: Agency for HealthCare Research and Quality, Medical Expenditure Panel Survey, data for per capita spending by age group in the Midwest. Excludes spending for long-term care institutions.

50. State Taxes Paid by a Married Couple Before and After Retirement -58% -$2,695 $1,987 $896 $1,091 $45,000 -72% -$1,459 $559 $559 $0 $25,000 Retired @ 70 % $4,682 $1,295 $3,387 $65,000 $2,018 $782 $1,236 $35,000 Working Pct Change Total Sales Tax Income Tax Income

51. State/Local Government’s Share of Personal Income Has Declined Mn Dept of Finance

55. Actual vs. Efficient MN One-Year Tax-Mix Given the Current Trend Growth Rate Actual FY 2005-2007 Portfolio Efficient Tax Mix Portfolio Difference: (Efficient Less Actual) Trend Growth Rate 7.70% 7.70% 0.00% Volatility (Standard Deviation) 3.26% 3.09% -0.17% Share of Total Tax Revenue General Sales 31.2% 60.3% +29.2% Corporate Income 7.4% 13.1% +5.6% Individual Income 48.1% 9.2% -39.0% Other Revenues 13.3% 17.4% +4.2% Total 100.0% 100.0%